The world economy is forecast to face a recession in 2020.

OPEC is forecasting a decline by 3.4%. while Fitch rating sees Further Economic Forecast Cuts. According to Fitch Rating report released on May 26th , World GDP is now forecast to fall by 4.6% in 2020 compared to a decline of 3.9% predicted in late April.                 

 OPEC world oil demand growth forecast for 2020 was adjusted lower by 2.23 mb/d and is now forecast to drop by 9.07 mb/d.                        

OPEC world oil demand estimates

However, oil demand contraction in past five months can be mitigated with actions taken by many countries to ease COVID-19 related measures and reopen their economies in a safe way, in line with the extraordinary fiscal and monetary stimulus packages implemented to support and refinance the economic recovery.

the U.S Baker Hughes Oil Rig count reaches a historical low number of U.S oil rigs at 237

U.S baker hughes oil rig count

U.S CRUDE OIL INVENTORIES

U.S crude oil inventories starts declining after reaching a peak of 14.6 Million barrels in April on a monthly average. The partial reopening of activity in many states helps pushing demand for oil and lifting oil prices by more than 80%.

Its latest data has shown an increase of 7.928 M barrels, to increase on a monthly average from 0.37 to 1.70 Million Barrels.

crude oil inventories

                 

Crude oil (WTI) Technical analysis:

After the sharp oil prices recovery in May, supported by OPEC+ historic agreement to cut supply by 9.7 Mb/d, and partial reopen of economic activity in many countries around the globe.

The wti reaches a strong resistance near 35.00$, which matches typically the 38.2% Fibonacci retracement.                          

oil price

Regarding the actual situation, oil supply and demand data, and growth forecasts, it is unlikely to see a breakout of the actual resistance with a consistent follow-through.

The most likely scenario is to see a congestion range around 35.00$.

A fast reopen of the economy and good news about COVID-19 vaccine are the important tail-winds that if they occur, they may push OIL prices higher.